Labels are intended to help you manage a large number of flows. By applying the same label to more than one flow, you can better organize them. You can even create child labels:
To label your flows, first check the boxes next to the flows you want to group together. By clicking on the label button at the top of the list, you'll have the option to apply an existing label or create a new label for the selected flows.
After clicking on the label button, you will see options for all of the labels you have previously created as well as an option to add a new label.
If you've created other labels, you'll be given the option of adding the new label to a parent label:
Parent labels are denoted by a "play" icon: